Welcome to the Beginners in Stock Trading Newsletter! Over the next several months, you’ll receive expert insights, proven strategies, and real-world examples from some of the greatest stock traders in history.
Every newsletter has 2 sections. The 1st section is devoted to learning. Each building on the previous day’s lesson in logical order. Giving you a full, free trading education in under ten minutes a day.
Missed a day? You can find all of the previous newsletters online to catch up or if you joined later.
The 2nd half of the newsletter is a briefing on 1-3 stocks in the news. Read it. Then click on the links to see the corresponding charts inside the original articles. This will accelerate your ability to read the charts.
Learning to how to trade will change your life.
Daily Lesson(each builds onto the next)
📝 Today, You’ll Learn:
✅ The warning signs of weak or false breakouts.
✅ What to look for in volume, base structure, and market conditions.
✅ How O’Neil and Minervini avoided traps and waited for real confirmation.
You buy the breakout.
It jumps 3%, then drops 7%.
You stop out… and feel like you just got suckered.
You probably did.
But it’s not your fault—it’s the market’s job to fool you. Your job is to learn how not to take the bait.
📖 William O’Neil taught:
“Most breakouts fail because they lack proper structure, timing, or volume. You must learn to wait for true confirmation.”
Let’s walk through how to spot fakeouts before they cost you capital—and confidence.
🚨 Red Flags That Signal a Fake Breakout
✅ 1. Weak or Low Volume on the Breakout
Volume must be 40–50% above average for a breakout to have conviction.
Weak volume = no institutional support, just noise.
📖 Mark Minervini emphasized:
“I don’t trust any breakout without volume. If big money isn’t buying, neither am I.”
✅ 2. Improper Base Structure
A breakout from a base shorter than 5–6 weeks often fails.
Sloppy, wide-and-loose patterns lack the tightness that precedes real moves.
Look for bases with tight closes, clean pivot levels, and minimal overlap.
✅ 3. The General Market Is Not Supporting It
Even perfect setups fail if the NASDAQ or S&P 500 is under pressure.
When distribution days rise or breakouts start failing broadly, it’s not time to get aggressive.
📖 O’Neil added:
“Three out of four stocks move with the market. Don’t ignore the tide when choosing where to swim.”
✅ 4. The Breakout Quickly Fails and Slices Back Through the Pivot
If the stock clears the buy point, then crashes back below on volume, it’s a failed breakout.
Don’t hold and hope—exit and reassess.
✅ 5. The RS Line Lags or Diverges
A Relative Strength line should hit new highs before or with price.
If it’s lagging, the breakout is probably weak—even if price says otherwise.
📉 Common Mistakes During Fakeouts
❌ Entering breakouts without checking the market trend
❌ Buying right at the open on gap-ups (many fail)
❌ Chasing stocks that already ran 5–10% past the pivot
❌ Ignoring volume—buying “quiet” breakouts hoping they catch fire
📖 Jesse Livermore warned:
“The market does not beat them. They beat themselves, because though they have brains they cannot sit tight and wait for confirmation.”
📌 Trader’s Checklist: Is This Breakout Real?
✅ Did the stock build a proper base (6+ weeks, clean structure)?
✅ Is the breakout volume 40–50%+ above average?
✅ Is the RS line at or near new highs?
✅ Is the general market in an uptrend (check distribution/follow-through)?
✅ Is the price holding above the breakout point on strength?
🎯 Action Step: Vet Your Watchlist Before You Buy
✅ Choose 3 breakout candidates on your list.
For each, ask:
Is the base long and tight enough?
Did the breakout come on convincing volume?
Is the RS line confirming or diverging?
What is the overall market environment?
✅ Eliminate anything with 2+ red flags.
✅ Wait for powerful confirmation, not wishful thinking.
Train Your Eyes On This Pattern(of the week)
Cup with Handle
📌 Understanding stock price growth:
Look up the historical stock chart of Apple (AAPL) from 2004 to 2024. Notice how the stock’s price has risen steadily over time with some pullbacks.
Use these market tools to scan for and review stocks:
✅ MarketSmith (MarketSurge) – Premium Market Analysis and Scanner Tool
✅ Charts.com – Budget-Friendly Charting Option
✅ TradingView – Free & Subscription Stock and Crypto Charts
✅ DeepVue – MarketSurge Inspired Analysis and Scanner
👀 Seeing real-world stock patterns helps train your eye for long-term trends.
Our Sister Newsletter. Because everyone’s a Beginner in something.
News
STOCKS SLIP AS AMAZON AND APPLE HEAD INTO EARNINGS SPOTLIGHT
Wall Street took a small step back Friday as investors looked ahead to big earnings reports next week from Amazon and Apple. The S&P 500 and Nasdaq both edged down slightly after several strong sessions, with traders pausing to catch their breath. Some profit-taking after a lively week kept gains in check.
Tesla continued to climb after its rally yesterday, lifting other tech stocks too. But cautious moves in broader sectors, including financials and healthcare, slowed the overall action. Investors now have their eyes set on next week's heavy hitters to keep momentum alive.
Stock Spotlight
Charles Schwab (SCHW)
Financial Services Firm Approaches Key Buy Point
Charles Schwab (SCHW) is nearing a pivotal buy point following robust first-quarter earnings and favorable analyst upgrades. Goldman Sachs recently elevated the stock to a “buy” rating, highlighting the company's strong balance sheet, debt reduction efforts, and consistent organic growth.
📊 Key Facts:
Current Price: Approximately $81.24
Q1 Earnings: Adjusted EPS increased by 41% to $1.04, surpassing estimates
Revenue: Rose 18% to $5.59 billion
Client Assets: Totaled $9.93 trillion, with $137.7 billion in net new assets
Analyst Outlook: Goldman Sachs projects EPS growth from $4.44 in 2025 to $6.29 by 2027, setting a price target of $100
Schwab's strategic debt management and capital accumulation position it well for potential share repurchases and sustained growth.
🧠 What This Teaches Traders:
Strong earnings reports can signal a stock's upward momentum.
Analyst upgrades often reflect confidence in a company's financial health and growth prospects.
Monitoring key financial metrics and analyst projections can inform investment decisions.
Refer a friend
5 referrals How to Make Money in Stocks Complete Investing System by O’Neill
10 referrals How to Make Money in Stocks Success Stories by O’Neill
15 referrals How to Make Money in Stocks, Getting Started by Matthew Galgani
30 referrals Trade Like a Stock Market Wizard by Mark Minervini
50 referrals Lifetime access to the upcoming video courses and 50% off live events and digital products
How to Make Money in Stocks Set
Thank you for reading. We’re all Beginners in something!
-Beginners in Stock Trading Team
This newsletter is for educational and informational purposes only. The content herein should not be considered financial advice, investment advice, trading advice, or a recommendation to buy or sell any securities or financial instruments.The strategies, opinions, and examples shared reflect the personal views and historical references from publicly available sources, including the works of William J. O’Neil, Jesse Livermore, Mark Minervini, and other professional traders.Trading in the stock market involves risk, including the risk of losing capital. Past performance is not indicative of future results. You should conduct your own due diligence and consult with a licensed financial advisor or registered investment professional before making any investment decisions. We do not guarantee any specific outcome or profit.
You are solely responsible for your own financial decisions and trading actions.